Bailey is not a professional money manager or an economist. He is a personal finance teacher at Weatherford High School. His students were not necessarily rich. They were typical teenagers.
“They took a pretty solid hit,” Bailey said. “The stock market dropped and kind of opened their eyes a bit.”
Bailey participates in a program called Invest Ed STARS (Students Tracking and Researching the Stock Market), one of several investor education programs made possible by the Oklahoma Securities Commission and produced by the University of Oklahoma.
“Most of us, at some point in life, make a poor financial decision, so we’re hoping to educate the students and make them aware of some of the pitfalls that are out there,” Bailey said. “I think it’s very beneficial.”
INVESTING IN EDUCATION
The STARS nonprofit education program began in 2003. As of this month, 1,005 state teachers have been trained and 15,515 students have participated.
Oklahoma Securities Commission Administrator Irving Faught, a founding father of STARS, said a common misconception is that young adults do not have the need or desire to worry about money management.
“They are familiar with the world of money, whether it’s just spending their allowance on food, clothing and entertainment, without any idea about saving or investing, or whether they work someplace where they’ll have to manage a retirement for themselves,” Faught said.
STARS is free to everyone involved; teachers attend workshops to learn the program and receive stipends. The program can be incorporated into different subjects, from economics to calculus.
In 2007, the Legislature passed House Bill 1476, which required state school districts to provide financial education for students.
“We believe our program meets all the requirements of that legislation,” Faught said. “Financial literacy is an important and very neglected area of our education and society.”
The STARS program is important for students from all socioeconomic backgrounds, program director Jo Ann Murray said.
“We have some teachers who are teaching kids who are not college bound, or may be more at risk for any variety of reasons,” Murray said. “(But) if a student is going to earn an income, the student needs to learn two things: how to manage an income and how to protect that income.”
Students are given $500,000 of virtual money to invest in at least 10 companies. They manage their portfolios over a period of time using free Internet programs like Yahoo Finance or Smart Money.
The seed money is an exaggeration to make a point, Murray said.
“If they were given $5,000, which is more realistic, if something did happen in the market, positive or negative, they would feel a tiny little ripple,“ she said. “But with $500,000, when something major happens, or even not so major, positive or negative, they will get a real jolt.”
Students research companies and take a risk assessment before buying stock. Then they track their portfolios over the next few months. At the end of the semester, they write a report about their experience.
The report makes STARS different from other programs, Faught said.
“They don’t try to achieve investment statistics in order to beat somebody in a game,” Faught said. “They analyze their strengths and weaknesses, and then they write about it.”
The state is divided into six regions, and state and regional winners are honored at biannual luncheons at OU.
“Making money is not a factor at all. It’s the process of doing the research, making the decisions,” said Bailey, whose students have won nine times.
Diversity is stressed when buying stocks, and oil and gas companies are typically hot with Oklahoma students, many of whom have established retirement accounts and tracked their portfolios long after finishing the program, Bailey said.
Jason Martin, a Weatherford senior and United States Naval Academy candidate who participated in the STARS program in spring 2009, said he initially bought companies like Sony and Apple because he had purchased their products.
“Being a younger generation, we use a lot of technology,” Martin said. “In the end, most of my stocks were either electronics or energy companies, because they seemed to be what America leans on.”
Francois Boda, a personal finance teacher at Mount St. Mary’s Catholic High School in Oklahoma City, has taught three regional winners, said his students are becoming increasingly aware of the necessity of money management.
“It’s a fantastic course to teach, because it allows kids at an early age to understand that one day when they leave the little cocoon of high school and college — when they are in the real world — they will be bombarded from all sides, and if they don’t understand how to manage their money, there are a lot of people who will be more than glad to take it from them.”
For more information, visit investedok.org.